ISLAMABAD: Federal Board of Revenue (FBR) issued valuation for used cars for purpose of collecting sales tax.
The FBR issued SRO 93(I)/2020 to amend Sales Tax Rules, 2006. The FBR issued the rules to implement to the law introduced through Finance Act, 2020 to determine the valuation of used cars.
The FBR inserted Rule 164A to the Sales Tax Rules, 2006, which stated:
“164A. Supply of used vehicles.
(1) Where a registered person is engaged in the business of purchasing and selling used vehicles from general public on which sales tax had already been paid at the time of import or manufacturing, the value of the supply shall be worked out in accordance with the sub-rule (2).
(2) The value of supply shall be worked out in accordance with the following formula, namely: A-B
Where
A is the consideration in money, including all charges and fees but excluding the amount of sales tax charged, received by the registered person from the buyer of the used vehicle; and
B is the consideration in money, including all charges and fee, paid by the registered person to the seller of the used vehicles:
Provided that the whole amount paid or received against the above mentioned transactions is made through banking channel as required under Section 73 of Sales Tax Act, 1990;
Provided further that in case a vehicle is sold at a price lower than its purchase price, the value determined under this sub-rule shall be deemed to be zero.
(3) No input tax credit shall be allowed to the registered person which is attributable to any goods or services acquired for the purposes of selling used vehicles.”
